- Scope 3 emissions are the elephant in the room.
- Exactly how and where this will happen is unclear.
- Wood Mackenzie has created a simple scorecard approach using clean electricity and CCS indices to identify basins best placed to make the transition.
According to a recent analysis by Wood Mackenzie, a Verisk business, energy mega basins of the future must meet three essential criteria: an abundance of resources, access to affordable renewable energy sources, and hub-scale carbon capture and storage (CCS) capabilities (Nasdaq:VRSK).
Business alters
The oil and gas business will alter geographically as a result of the need for sustainable energy, becoming more and more entwined with renewables. Therefore, the upstream business must concentrate on areas where its synergies with new energies are greatest in the 2030s and beyond.
More than 90% of the world’s oil and gas are supplied by fewer than 50 conventional super basins. These are classified as basins with remaining resources of more than 5 billion boe from initial holdings of greater than 10 billion boe.
Traditional super basins ranked by produced plus remaining resources
Wood Mackenzie vice president Andrew Latham said: “Of the remaining resources from traditional super basins, only 1,453 billion boe or half have been identified as future-fit energy super basins defined as having abundant resources, access to low-cost renewables and hub-scale CCS opportunities.”
“The upstream industry of the 2030s will have a different footprint as investment migrates to the new energy super basins.”
Decarbonising the upstream is the industry’s most pressing sustainability task.
Latham said “The co-location of low-cost renewables with low-cost oil and gas is key.”
Scope 3 emissions are the elephant in the room.
Scope 3 emissions can be reduced directly by cutting production or indirectly via sequestration or offsets, and CCS is the most promising sequestration technology.
All existing, planned and hypothetical CCS projects add up to just under 1 Btpa CO2e total capacity.
These are concentrated in a handful of countries, largely reflecting the location of commercially feasible CO2 point sources rather than the limited availability of subsurface storage resources.
Exactly how and where this will happen is unclear.
Some are obvious candidates, scoring highly on all criteria.
Energy Super Basins map
The US Gulf Coast and Permian basins are both energy super basins. Both offer plentiful clean electricity from excellent solar power potential and additional renewables from the wind. Wood Mackenzie expects a substantial CCS industry to emerge, based on hub-scale CO2 sources from refining, petrochemical and other industrial facilities around the Texas coast.
Latham said: “These scores are not set in stone. Plenty of basins currently sit somewhere in between energy super basins and disadvantaged basins.” Host governments may have opportunities to improve the outlook of a basin. Carbon taxes and other fiscal and regulatory moves to accelerate decarbonisation – especially where they enable CCS – could play an important role and should be seized where possible.
“Recognising the long-term direction of travel presents an urgent call to action. It will take many years, even decades, to fundamentally realign global upstream portfolios with the new energy super basins. The first-mover advantage applies. The sooner the transition starts, the better.”
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Source: WoodMac
